A business plan is a very important tactical tool for businesspersons. A well-written business plan gives business owners and entrepreneurs the ability to set goals and track their progress as the business starts to grow. If you are thinking to start a business then you should create a formative business plan to make sure your business is on the right path. In this guide, I will provide all the details that you will need to write a successful business plan. Let’s explore the content!
Usually, a business plan contains a brief but comprehensive road map of a business, how it will operate, and its future growth. A business plan consists of an executive summary, company description, market research, details of the products, fundraising strategies, management overview, business structure, etc.
What Is A Business Plan?
A business plan is a complete road map for your small business’s growth and development. It describes who you are, what your business is, and how you will operate your business. A well-written business plan can attract new investors to your business. Before investing, investors want to know product details, whether the product has market demand or not, scalability, etc. A well-templated business plan gives investors a quick overview of what to expect from the company and tells the investors about you as an entrepreneur.
Importance Of A Business Plan
Usually, venture capitalists (VCs) or financial institutes like banks don’t want to invest in a startup or small business without a solid, written plan. So, a business plan not only helps you focus on concrete objectives but also gives investors reassurance that you’ve thought ahead. Recent research from Bplans said –
1. Businesses with a business plan grow 30% faster than those without.
2. Owners with business plans are twice as likely to grow, get investments, or secure loans than those without.
3. Entrepreneurs with a business plan have a 129% increased likelihood of growing beyond the startup phase and a 260% increased likelihood of growing from “idea” to “new business.”
Moreover, the Journal of Business Venturing’s 2010 meta-analysis stated –
“Business planning increases the performance of both new and established small firms.”
What To Include In A Business Plan?
What information you should include in a business plan depends on the type of business plan you are creating. Some common business plan types are –
1. One-pager
2. Startup
3. Internal
4. Strategic
5. Feasibility
1. One-pager
This type of business plan consists of one page and is meant to be high level and easy to understand at a glance. This type of business plan should consist of –
1. Executive summary: truncated
2. Market analysis: summarized
3. Products and services: summarized
4. Marketing plan: summarized
5. Logistics and operations plan: summarized
6. Financials: summarized
2. Startup
If you are setting up a new business then this is the right business plan for you. Entrepreneurs develop this type of business plan to secure outside funding. Startup business plan should include –
1. Executive summary
2. Company description
3. Market analysis: in-depth
4. Products and services
5. Marketing plan
6. Operations
7. Financials: in-depth
3. Internal
An internal business plan helps the employees to remain on the same page and aligned toward the same goal. This type of business plan should include –
1. Executive summary
2. Company description
3. Market analysis
4. Products and services
5. Marketing plan
6. Logistics and operations plan
7. Financials
4. Strategic
This type of business plan has more importance because it gives a more long-term look at your business. A strategic business plan tends to look further into the future, and growth and revenue goals may be higher. It should include –
1. Executive summary
2. Company description
3. Market analysis: comprehensive outlook
4. Products and services: for launch and expansion
5. Marketing plan: comprehensive outlook
6. Logistics and operations plan: comprehensive outlook
7. Financials: comprehensive outlook
5. Feasibility
This is a type of pre-business plan and many people consider it as a feasibility study. This type of business plan usually includes –
1. Company description
2. Market analysis
3. Products and services
4. Logistics and operations plan
5. Financials
How To Write An Executable Business Plan
A business plan consists of lots of elements. However, not all elements are required for each business plan. Some key elements of a business plan are –
1. Executive Summary
2. Market Opportunity
3. Competitive Landscape
4. Product or Service Details
5. Marketing Strategy
6. Describe Organization and Management
7. Funding Request
8. Financial Overview
1. Executive Summary
The executive summary of a business plan contains all the vital information about your business within a relatively short space. Usually, an executive summary is one page or less. It is arguably the most important section in the entire business plan. Most executive summaries include:
1. Mission statement
2. Company history and leadership
3. Competitive advantage overview
4. Financial projections
5. Company goals
The above points will be covered in more detail later on in the business plan so, make sure to keep your executive summary brief and only include the important notes.
Example of an executive summary
2. Market Opportunity
In this part of a business plan, you will provide a detailed overview of your business’s market opportunity. You should try to outline your ideal potential customer as well as the actual and potential size of your market. In this section, you can include –
- The size of the market
- Current or potential market share
- Trends in the industry and consumer behavior
- The gap of the market
- Demographic information:
- Location
- Income
- Age
- Gender
- Education
- Profession
- Hobbies
Example of Market Opportunity
3. Competitive Landscape
In your business plan, you should include detail on who the top competitors are. You have to identify other companies that currently sell in the market where you want to enter. Investing time to research competitors might seem overwhelming but it can be extremely useful. Conducting competitive research can help you uncover:
1. Key industry trends that competitors are following
2. How they are advertising their products?
3. Their press coverage strategy
4. How they are providing customer service
5. Strengths and weaknesses of the competitors
6. Competitor’s sales and pricing strategies
Example of Competitive Landscape
4. Product Or Service Details
This section of a business plan contains detailed information about the products or services that you are planning to offer to your customers. Here you have to include the benefits, production process, the life cycle of your products or services as well as what your product/service is offering that is better than the competitors. You should try to include –
1. Unique features of the products/services
2. Translating features into benefits
3. Emotional and practical payoffs to your customers
4. Intellectual property rights or any patents that protect differentiation
5. Up-sells, cross-sells, and down-sells
6. Future plans for research and development
Example of Product or Service
5. Marketing Strategy
Here you will discuss how you’ll acquire new customers with your marketing strategy. This part of the business plan must contain information that includes –
1. How you will increase the brand value
2. The target you want to achieve
3. The metrics you’ll use to measure success
4. Growth tactics for established businesses to expand
5. Retention strategies like customer loyalty or referral programs
6. Which Advertising and promotion channels you would like to use
Example of Marketing Strategy
6. Describe Organization And Management
Your business plan must contain information regarding your company and management. Provide the identity of your team members and describe how this team can turn your business idea into a reality or continue to grow it. Moreover, you should highlight the expertise and qualifications of your team members in the business plan.
Example of Organization and Management
7. Funding Request
If you need funds for your business then you have to include your funding strategies in the business plan. A new business doesn’t have a track record of generating profits, so it might be difficult for you to raise funds for your business. Therefore, include a well-thought funding strategy on your business plan.
Example of a Funding Request
8. Financial Overview
This section is very important to investors and leadership teams because the information of this section helps them to determine funding strategies, investment opportunities, etc. According to Forbes, the financial part of a business plan should include –
1. Income statements
2. Profit/Loss Statement
3. Cash Flow Statement
4. Balance Sheet
Moreover, you can also include –
1. How much revenue from your business, do you retain as your net income?
2. The ratio of liquidity to debt repayment ability
3. How often do you collect on your invoices
Example of Financial Overview
Final Thought
Finally, creating a business plan serves as a roadmap that you can use for your new business at launch and reach your growth goals. While creating a business plan you should remember that some business plans might include more or less information. So, try to make a business plan according to your business requirement and insert as many key details as you can into the business plan.
References:
1. https://www.sba.gov/starting-business/write-your-business-plan
2. https://articles.bplans.com/how-to-write-a-business-plan/
Last Updated on February 16, 2022 by
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
